WeWork Global, a US-based commercial real estate company that provides shared workspaces for technology startups and services for other enterprises, announced that it has bought 20% stake in WeWork India, a fully-owned subsidiary of Bengaluru-based estate developer Embassy Group, for $100 million. The investment is in line with the Company’s plan to scale up its operations in India over the next 36 months, as per the ETtech report.
“India is one of the key markets for WeWork.The fresh round of capital from our long-term partners at WeWork global represents a vote of confidence in our strategy and in India operation. Sandeep Mathrani, global CEO of WeWork will also have a board seat in the India operation,” said Karan Virwani, CEO of WeWork India.
Post investment, WeWork India business is valued at about $500 million. “The company plans to use the money for growth capital apart from paying vendors and capital expenditure,” said Virwani.
WeWork India, which had earlier planned to increase the number of desks to 90,000 by the end of 2020, said the focus is now on profitability rather than growing the number of seats.
“We were profitable till March but the COVID-19 outbreak has hit profits. In the last six month, the revenue growth was at 25%, which is lower than the last three years average. We are expecting to close the year with 35,000 members mainly led by large enterprises that form 60% of our portfolio,” said Virwani.
Recently, the company has signed 12,000 desks with large enterprise clients like Netflix India, Commonwealth Bank of Australia and John Deere.
“We will grow with our clients and plan to focus more on opportunistic expansion through asset light model. Companies are looking for Covid-19 safe environment and demand for flexible managed space will pick up once the market opens up,” said Virwani.
WeWork is currently present in 34 locations across six markets in the country, including Bengaluru, Gurgaon and Mumbai.
According to Colliers International, the flexible office segment growth is expected to remain muted in 2020 and is expected to see some recovery only in the second half of 2021. Flexible workspace leasing in H1 2020 was 16% of gross office leasing totalling to 2.7 million sq ft as compared to 19% or 5 million sq ft 0f total office leasing during the same period in 2019.
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